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Ukraine Industry March 2016

Ukraine: Industrial production posts growth for second consecutive month

April 26, 2016

In March, industrial production increased 4.8% over the same month last year, according to data released by the State Statistics Service of Ukraine. The result followed February’s notable 7.6% expansion, which had marked the first growth since July 2012. Growth was nearly broad-based, with expansions tallied in manufacturing as well as in mining and quarrying.

Ukraine’s industrial output has been plagued by the ongoing crisis between the Ukrainian government and pro-Russian separatist groups, which is centered in the eastern regions of Luhansk and Donetsk, Ukraine’s industrial heartland. However, data has begun to turnaround at the start of 2016, although largely due to the low base from last year. In March, industrial production expanded significantly in Luhansk and Donetsk.

On a monthly basis, industrial production expanded a seasonally-adjusted 6.8%, which followed February’s 8.2% increase. The trend continued to improve and annual average variation in industrial output in March rose from February’s minus 8.7% to minus 6.7%.

FocusEconomics Consensus Forecast participants’ project that industrial output will grow 2.3% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, panelists expect industrial production to rise 3.9%.

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According to data released by the Statistical Institute, industrial activity fell 0.5% in December over the same month of 2016, reverting to contractionary territory after expansions of 0.3% and 0.4% in November and October, respectively.

At its meeting on 25 January, the National Bank of Ukraine (NBU) in a surprise move announced its decision to hike the key policy rate from 14.50% to 16.00%, marking the third consecutive rate hike since October.